Looking at those pictures, I do not think that the oil is leaking from the rear seal. If it were leaking from there, it would primarily appear from the drain hole in the front of the flywheel housing, or if this is fitted with a wading plug, from the join between the bell housing and flywheel housing. This does not appear to be the case, but it appears to be coming from higher up. This is most likely from either the rocker cover gasket or from the oil feed pipe to the head. It could also be gearbox oil leaking from the selector shafts.
But the volume of it strongly suggests to me that it is being supplied under pressure, and that says it is the oil feed line.
I suggest further investigation before concluding that the engine needs to come out.
John
John
JDNSW
1986 110 County 3.9 diesel
1970 2a 109 2.25 petrol
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